INFRASTRUCTURE

MINING & METALS

NUCLEAR, SECURITY & ENVIRONMENTAL

OIL, GAS & CHEMICALS

Procurement Drives Value

Paul Gibbs

Managing Director, UK

7th June 2018

The strength of our team 2017 Financials

25,000 extraordinary projects, many first-of-a-kind, in 160 countries on all 7 continents

Engineering the Extraordinary

80% of nuclear plants in the

U.S. designed, delivered, or

serviced by Bechtel, and

150 worldwide

Procured more than $1.3

billion in goods and

services from U.S. small

businesses in 2015

Building the world’s

largest and most complex

radioactive waste treatment

plant

Nuclear, Security &

Environmental

200 million metric tons per

year of installed iron ore

production

42 major copper projects

30 aluminium smelter

projects

8 alumina refinery projects

Mining & Metals

Bechtel has delivered:

$25.9 revenue in billions of U.S. dollars

$11.8 new work booked in billions of U.S.

dollars

50,000+ colleagues worldwide

100+ nationalities

#1U.S.

Contractor

20th Straight

Year

From

Engineering

News-Record’s

Top 400

Contractor List

2017

300 subway and rail

projects

17,200+ miles (27,700

km) of highways and roads

6,200+ miles (10,000+

km) of railroad

390 individual power plants

Infrastructure

40+ LNG trains producing

120+ million metric tons per

year

275+ refinery expansions

and modernizations

6,200+ miles (10,000+ km)

of pipeline systems

380 major chemical and

petrochemical projects

Oil, Gas &Chemicals

© 2018 Bechtel | 2

Bechtel Group Organisation

© 2018 Bechtel | 3

Vision: To successfully deliver a portfolio of infrastructure projects across

the globe where we can deliver differentiated value, giving more for less

▪ Aviation

▪ Bridges/Tunnels

▪ Communication Networks

▪ Highways

▪ Ports & Marine

▪ Power and Transmission

▪ PPPs

▪ Rail

▪ Liquefied Natural Gas

▪ Offshore

▪ Onshore Oil &

Gas/Downstream

▪ Petrochemicals

▪ Pipelines

▪ Storage Tanks

▪ Water

▪ Hydro-/Pyro-metallurgical &

Mineral Processing

▪ Metal Forming

▪ Mine Planning

▪ Mineral Exploration and

Geology

▪ Chemical Weapons

Destruction

▪ Commercial Nuclear Power

▪ Critical Infrastructure

▪ Environmental Cleanup

▪ Nuclear Security Operations

▪ Waste Processing

Mining & Metals

Fjarðaál Aluminium Smelter,

Iceland

Oil, Gas & Chemicals

Wheatstone LNG, Australia

Nuclear, Security &

Environmental

Wylfa Newydd Nuclear Power

Plant, Wales

Infrastructure

Crossrail, London

Bechtel Globally

Ivanpah Solar Generating System

Russell City Energy Center

Sabine Pass LNG

Chornobyl Shelter Implementation Plan

Hanna Region Transmission

Corpus Christi LNG

West Nile Delta Gas Plants

Jamnagar 3 Offsites and Utilities

Wheatstone LNG

Queensland LNG ProjectsPascagoula Base Oil Project

Kitimat Modernization Project

Worsley Alumna Efficiency & Growth

Project

Brisbane Hub Projects

Yarwun Alumina Refinery

Kooragang Expansion

Ras Al Khair Aluminum Smelter

Surmount 2

California Valley Solar Ranch

Prairie State Energy Campus

Davis-Besse Nuclear Plant

Watts Bar Nuclear Plant

Panda Power Projects

Metro Rio Project

McCarran Airport

Blue Grass Pilot Plant

The Greater West Route

Modernization

Crossrail

Kosovo Motorway

Jubail

Hamad Airport

Khalifa & KPIZ

Hanford WTP/Hanford Cleanup

Lawrence Livermore National Lab

Los Alamos National Lab

Dulles Metro Extension

Pueblo Pilot Plant

U.S. Nuclear Security Enterprise

Naval Nuclear Propulsion Plants

Gabon Infrastructure

Angola LNG

Mozambique LNG

Las Bambas Mine

Antapaccay Mine

Laguna Seca Project

Muscat Airport

Wa’ad Al Shamaal City Development

Savannah River Remediation

Wylfa NewyddNuclear Power Plant

Gatwick AirportAnkara-Gerede

Highway

Athens Metro

Fjarðaál AluminiumSmelter

HS2

Los PelambresCopper Mine

Escondida Water Supply

London City Airport

© 2018 Bechtel | 4

Full Scope of Project Services

Business Case & Concept Planning

Project Management

Integrated Engineering, Procurement, Construction

Startup & Commissioning

O&M

▪ Project

Development (Site

Selection &

Permitting)

▪ Project assessments

▪ Commercial

structuring

▪ Financing

▪ Contracts

▪ Establish Project Execution Plan

▪ Organize execution team

▪ Prepare risk register and risk mitigation

▪ Monitor and report cost and schedule

▪ Preliminary and detailed design

▪ Procurement Systems

▪ Construction

▪ Plant testing and commissioning

▪ Operator Training

▪ Operations and maintenance plans

▪ Renewals

© 2018 Bechtel | 5

UK Procurement of Larger Projects

▪ Separate contracts for Engineering, Procurement, and Construction (EPC)

▪ Varied approach across the industry; customer and sector dependant

• Customers with integrated early procurement: private sector

- London City Airport/Gatwick Airport (privately funded)

- Combined Cycle Power Plants (fully integrated EPC)

• Customers with siloed and late procurement: public sector

- Heathrow Airport

- Network Rail

- High Speed 2

- Highways England

▪ Split packages of engineering and later contractor

involvement results in:

• Increase in interfaces with numbers of contractors

• Increased programme duration

• Increased risk (managing vs taking risk)

• Increased cost

• Reduced quality and fragmented delivery

• Reduced innovation

• Reduced confidence of outcome

▪ EPCM or EPC approach Bond Street, Crossrail

© 2018 Bechtel | 6

Value of Early Engagement

Integrated

EPC

Staff Augmentation

Large owner with

> 1 to 1 cover

Low

Typical

private sector

investment

Typical

public sector

investment

Valu

e

Time

Realistic

estimate Liars poker

bidding

Best Practice

Quality / Open book

Concept Co-ownership

Conceptualise What High likelihood of

overrun of cost

and schedule

How

© 2018 Bechtel | 7

Summary

▪ Plans for UK infrastructure are ambitious

• Capacity of industry is limited

• Contracting model: weak balance sheets, poor supply chain management

• Productivity: contracting model doesn’t encourage investment

• Offsite manufacturing is not a panacea

• good structuring of deals provides for better value

▪ Clients demanding change to a more focused and realistic approach to ensure successful

delivery of major critical infrastructure projects

• public procurement is evidence based, not outcome responsible

▪ Earlier contractor involvement will:

• Provide horizontal integration across the scope to reduce risk, integrating Engineering,

Procurement, and Construction

• Influence cost and schedule, allowing for ownership of the scope

• Results in greater influence on the outcome

• Add value to the project; provide more for less

© 2018 Bechtel | 8

Questions & Discussion

Paul GibbsManaging Director UK

+44 20 76517819

pgibbs@bechtel.com

© 2018 Bechtel | 9